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Govt urged to drop cigarettes from free import list
Deccan Herald - 29 Nov 2001

A STEEP decline of about 14 per cent in the share of cigarettes in the country’ s tobacco market notwithstanding, the domestic cigarette giant ITC’s gamble-cum-foray into the branded premium apparel segment made a year ago has started paying off. It will not be quite surprising if the Lifestyle Retailing Business Division (LRBD) of the company floated a couple of years back may emerge as one of the major money spinners for the tobacco major in the next few years.

When ITC, in a major diversification exercise, embarked on a drive for mass distribution of its branded garments in an aggressive manner in the wake of launching its maiden premium Wills Lifestyle store in New Delhi in July, 2000, few could imagine that the Wills Sport brand would spread out nationally so fast. But it did, thanks to a strategically planned initiative by the ITC top honchos to leverage the company’s proven competency in brand building.

In fact, that ITC would increasingly lay stress on this newly-created apparel division was made categorically clear by its Chairman Y C Deveshwar during the company’s 90th AGM last year. "The success of Wills Sport brand of premium relaxed wear for men and women has spurred the company to open 18 additional stores in the country since June last. We would like to go for mass distribution of branded garments and then, take it to the overseas," Mr. Deveshwar told the shareholders adding that the company has also been aiming to scale up this operation to around one hundred stores over the next couple of years and the strong brand value of ITC would thereafter, help boost the export prospects.

Spurred by the retail response, Wills Lifestyle opened its 42nd store in the country and the first exclusive leisure outlet in Kolkata early this month. All this happened in the past nine months and ITC is currently steadfast in its aim to hike the number of such outlets to 100 within the 2002-03 fiscal.

Commenting on ITC’s plans in the Lifestyle Retailing business, Mr. Deveshwar observed: "We are nurturing the ‘Wills’ trademark to be a clear leader in premium lifestyle retailing in India. Over the time, we aspire to position it as a leading Indian international brand with a significant global presence. In fulfilling the vision, ITC aims to make a major contribution to the fibre-to-fashion value chain in India to enhance international competitiveness."

The ‘Wills Sport’ label was first test-marketed at the Golf pro-shop at the Royal Calcutta Golf Course (RCGC) in 1997; with he overwhelming response from customers, the product was thereafter expanded to eight other golf courses in India, covering all key golfing destinations. The label’s success, in fact, provided ITC with the required confidence to move into branded apparel segment with the relaxed wear brand of ‘Wills Sport’. Besides apparel, the brand also offers customers accessories such as bags, belts, socks and caps.

The formal launch into relaxed wear was made by ITC after an exhaustive market survey, with designs obtained from the San Francisco-based American Design Intelligence Group (ADIG), a company with vast experience in store designing and merchandising. Italian designer Jiaco Melli also chipped in with his idea.

Adapting to the existing international style, LRBD’s design team has created designs to suit Indian tastes and conditions.

LRBD which has clocked sales worth Rs 20 crore in 2001-02, aims to increase it by three times in the current fiscal. LRBD chief executive Mr. Sanjay Keshava projects the sales to grow at a rapid pace and touch Rs 200 crore mark by 2005 when he expects ITC to attain a leadership status in the premium branded segment in India.

Currently, the entire branded segment is worth Rs 5,000 crore of which the premium market accounts for roughly around Rs 700 crore. As per estimates, this premium segment has been pegged to grow at 24 per cent notwithstanding the overall gloom in the economic scenario.

And for garnering a substantial pie in this burgeoning premium market, there has not been any full stops for ITC so far as investment is concerned; it has already pumped in quite a sum to achieve an ambience in the Lifestyle stores through extensive use of glass, steel and granite and almost an identical design format is being followed in all the 42 stores.

On top of it, a state-of-the-art Design & Technology Centre is being set up at Gurgaon to ensure that the brand maintains the highest levels of quality and innovation. Interestingly, besides apparel, ITC has already lined up new products which include greeting card and foods for which it has ambitious plans.

In reply to a question on whether the division is toying with the idea of retailing some of these new products at the outlets, Mr. Keshava pointed out that quality packaged food, cigarettes and greeting cards could as well fit into the prevailing ambience of the Lifestyle stores.

"However, we are still studying various possibilities; at the moment, they (stores) will maintain thrust on core products- relaxed wear and may consider looking at other premium Indian outfits at a later stage," added the chief of the division which hopes to break even sometime around March 2003.

Apparels apart, the point that senior ITC officials would not like to gloss over at this hour is a sharp decline in the volume of tobacco consumption that would further justify why the company has chosen the right path for diversification.

The decline, coming as it does with an array of latest prohibitions imposed by the Centre and various state government on smoking, has ensured a de-growth in domestic cigarette volumes, thanks to a steep increase in excise duty imposed in the Union Budget and an adverse impact of the growing contraband trade in cigarettes where imported varieties are freely being sold. It had its natural impact.

But ITC’s sustained focus on investment in brands has enabled the company to achieve a declaration in the rate of de-growth of domestic cigarette consumption. No wonder ‘Wills Sport’ notched up the award for "The most Admired Brand Launch of the Year".